http://money.msn.com/exchange-traded-fund/latest.aspx?post=1dc008c1-6cac-46aa-8329-16d60718784c
WE NEEDZ MOAR REGULATION!
I just love it when people that dont know crap about economics, talk about economics…some of my favorite comments:
so i guess, the US government, using massive amounts of oil and putting a huge dent in the supply to drive their multiple wars doesn’t effect price?
Can anyone find a statistic that shows just how much oil our military uses and stores as reserves (just for use by them)?
And as usual the actual mechanism of how speculators and the new financial boogeyman, the ETF, has caused prices to rise. My question is still that no one seems to be able to answer is: By what mechanism can a speculator engaging in a zero sum game with a supplier cause the price to rise? I have never gotten a satisfactory answer to this question.
A better explanation would be to look at the behavior of the US Government and the US Central Bank. The USG keeps butting into every tiny squabble in an oil producing country causing lots of political mayhem. The Fed keeps lowering the value of the currency so it is taking more dollars to equal the same wealth that the speculators would trade for the petrol.
I heard O’Reilly saying, “supply hasn’t changed, so what’s the problem?” He keeps pointing to how it’s not being managed by supply and demand. I’d venture to say that nothing is governed by supply and demand these days since the government is involved in absolutely everything and that everything they do causes huge market distortions. However, he can’t even realize how circumstances effect the price of a good. Oil is perceived as a volatile market thanks to intervention in Lybia, so prices rise because there is fear of there being more scarcity. Not that I would defend Big Oil, but it’s not as simple as leftists or populists make it out to be.
Here’s a great one: